• Japan remains as region's hotspot; Greater China reclaims pole position in exit value
• Leading funds navigate challenges and opportunities presented by AI

SINGAPORE, March 23, 2026 /PRNewswire/ -- Asia-Pacific private equity enters 2026 showing signs of investor confidence as liquidity improves due to exit value rebounding for a second consecutive year, and net cash flows to investors turning positive for the first time since 2021, according to Bain & Company's Asia-Pacific Private Equity Report 2026.

Total deal value fell 8% in 2025, even as deal count rose 6%, the report finds. The year was marked by start-stop deal activity with deal value rising sharply and then falling from quarter to quarter, shaped by macroeconomic uncertainty, tariff developments and persistent valuation gaps. While exit value rose 24% year-on-year and exit count increased 8%, fundraising declined to approximately $58 billion – its lowest level in 12 years.

Buyouts continued to account for approximately half of total deal value in 2025, but the average buyout size declined to a five-year low of around $438 million, compared with approximately $630 million in 2024. Mega buyout activity was muted, contributing to the decline in overall deal value.

"Asia-Pacific private equity is entering a more constructive phase, and we are seeing early signs of optimism," said Sebastien Lamy, co-head of Bain & Company's Asia-Pacific Private Equity practice. "Improving exit activity is helping restore liquidity and offers a pathway toward easing capital constraints. At the same time, fundraising pressure, elevated valuations and macroeconomic uncertainty mean that funds will need to remain disciplined in underwriting, proactive in portfolio management and clear in how they differentiate."

Japan was once again the standout market and the only major market in the region to record growth in both deal value (26%) and deal count, supported by corporate governance reforms, carve-outs and privatizations, and supportive financing conditions. Greater China remained the largest deal market in the region with more than 25% share in the region's total deal value. The market saw a rebound in deal count from a low base after three consecutive years of decline, following improved policy visibility and market sentiment.

Sector dynamics also shifted during the year. While technology, media and telecommunications remained the largest sector, its share of deal value fell to a 10-year low of approximately 25%. Advanced manufacturing and services was the second largest (22%), followed by energy and natural resources (15%) and healthcare and life sciences (14%). Retail experienced a resurgence to 9.2% of total deal value, supported by normalized operating conditions, stimulating domestic consumption policies, and several large quick-service restaurant transactions across the region.

Exits were the bright spot of 2025. Robust IPO markets and strong public market performance were the main catalysts for increased exits, cited by 56% of the GPs surveyed by Bain. IPO and open market exit value rose more than 70% compared with 2024, reclaiming the top exit channel position. Consequently, the value and number of exits greater than $1 billion increased roughly fourfold year over year, reaching their highest level since 2021. Trade exits remained strong in 2025, growing more than 60% year over year and ranking as the second-largest exit channel.

In 2025, Greater China overtook India to reclaim its position as the region's largest exit market. The market saw a surge in exit volume and value (76%) as investor sentiment improved. India's exit value grew 13% compared to 2024 as investors capitalized on richly valued public markets and pursued a select number of large deals. South Korea's exit value grew a notable 38% as it benefited from a depreciating local currency, which helped make some assets' pricing attractive for trade and secondary sales to global investors.

Despite the improvement in exits, aging holdings and underperforming 2020-2022 vintages continue to weigh on the industry, leaving a structural exit overhang across the region. The number of portfolio companies held for more than five years increased by 18% compared with 2024.

Fundraising continued to weaken for the fourth consecutive year, falling to approximately $58 billion in 2025, with the region's share of global fundraising declining to around 5%. Japan-focused funds raised $15 billion, up 12% year over year, making it the largest contributor to Asia-Pacific-focused fundraising. Dry powder decreased to approximately $240 billion, down from its 2023 peak.

Despite a challenging fundraising environment, there are some positive signs. Approximately 60 Asia-Pacific-focused funds with target sizes greater than $1 billion remain in the market, representing more than 10% of global fund-raising targets – well above the region's 5% share of recently closed funds. There have also been early commitments to several large funds. At the end of 2025, the six largest funds had disclosed approximately $25 billion in secured commitments. If all close at target in 2026, these funds alone would collectively exceed the $58 billion raised by all the region's funds in 2025.

Additionally, net distributions turned positive after three years of net outflows, offering partial relief to limited partner liquidity pressures. These signs point to early confidence that market conditions may begin to ease.

Median valuation multiples rebounded to approximately 13.4x in 2025, up from 11.9x in 2024, supported by public market performance and seller expectations. High entry valuations continue to rank among the top concerns for GPs, reinforcing the need for disciplined underwriting and active value creation to generate returns in a more competitive environment.

The report also highlights the growing importance of artificial intelligence (AI) in both diligence and value creation. AI considerations are increasingly central to investment theses, with funds assessing whether AI will augment, transform or, in rare cases, revolutionize a target company's business model. While full disruption remains relatively rare, AI is reshaping cost structures, commercial effectiveness and operating models across portfolio companies. Results to date have been mixed, underscoring the importance of disciplined diligence and hands-on execution support.

"AI is no longer optional in private equity," said Ben MacTiernan, a partner in Bain & Company's Private Equity practice. "Investors are integrating AI assessment into diligence and building capabilities to support portfolio companies across strategy, data and technology foundations, operating model and change management. The advantage will go to funds that combine sector insight with execution capability."

Media contacts:
Dan Pinkney (Boston) — dan.pinkney@bain.com
Gary Duncan (London) — gary.duncan@bain.com
Ann Lee (Singapore) — ann.lee@bain.com

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